Kapil Sibal's decision to cancel 74 permits can fetch Rs 12,985.46 cr

NEW DELHI: Telecom minister Kapil Sibal's decision to issue showcause notice for cancelling 74 mobile permits will free up 180.4 MHz of second generation (2G) GSM airwaves across the country, an analysis by ET reveals.

Calculations say that even without an auction, these airwaves can fetch the exchequer 12,985.46 crore if they are dished out to incumbents at the administered price suggested by Trai.

ET had reported earlier this month that Sibal, in major departure from his ministry which wanted showcause notices issued to only 15 licencees, had decided to put all 74 mobile permits on notice.

The minister's decision came after Trai had refused to budge and turned down the telecom department's (DoT) demand that it reconsider its November 2010 recommendations where it had suggested that government cancel all 74 telecom licences of five operators, including joint ventures of Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC amongst others.

Besides, the regulator had even obtained legal opinion from two eminent jurists (former judges of the Supreme Court) to support its stance.

The ET analysis reveals that cancellation will free up over 10 MHz of airwaves in six regions - Andra Pradesh, Punjab, Harayana, North East, J&K and Assam. It will also free up to 8.8 MHz of airwaves in several key circles, such as Kolkata, Maharashtra, Gujarat, Rajasthan, MP and Himachal Pradesh.

India has not allotted 2G airwaves, largely used for voice services to any mobile phone company since late 2008, with the telecom department maintaining that it had exhausted this resource in most regions, and also that it was in the process of finalising a new methodology to award this spectrum.

According to BK Syngal, senior principal, Dua Consulting, and former chairman of VSNL, the telecom department while issuing the notices, was simultaneously offering another option for these companies by preparing an exit policy.

Syngal said that either of these options would free up spectrum, a move that would help other new entrants such as Tata Teleservices and Uninor (majority owned by Norway's Telenor), which are yet to receive even start-up airwaves in several circles, including Delhi.

These companies are unlikely to get any airwaves unless the government takes back 2G airwaves from some of their competitors whose licences, Trai had recommended, be revoked.

ET had first reported on the government's plans for an exit policy in July, while adding that ministry officials were of the view that for these companies - some of which have not been able to start operations - this option would be better suited when compared with cancelling the licences, a course of action recommended by Trai.

This is because, the DoT feels that cancellation could potentially lead to protracted legal proceedings, which could paralyse the sector for years and prevent consolidation in the 14-player market.

A total of eight new entrants were given 2G mobile permits under controversial circumstances by then telecom minister A Raja. So far, only Unitech Wireless, in which Norway's Telenor holds a controlling stake, and Shyam, majority owned by Russia's Sistema, have launched full-fledged networks in certain circles - these telcos have also unveiled their road map to be pan-India operators by 2012.

S Tel, which bagged licences for six circles, has also launched services while Swan (Etisalat DB), Datacom (Videocon) and Loop Telecom have only undertaken 'token rollouts' to protect their permits and have minuscule customer base.

Allianz Infratech, which bagged mobile permits for two circles, had merged with Swan in 2009 while BK Modi-promoted Spice Group, which also bagged six licences, sold its telecom operations to Idea Cellular.